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13 Cards in this Set
- Front
- Back
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Distributions of E&P in excess of current and accumulated E&P do what?
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Reduce the basis in the stock of the receivers.
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Distribution order for Current E&P, Accumulated E&P, Return on Capital.
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Current reduced to Zero first, Then take from Accumulated, Then start reducing basis with excess of those; if reach zero, then becomes Capital Gains.
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When to calculate E&P?
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End of the year, treat all distributions as though were done on last day.
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Formula for Calc individuals Current E&P distribution?
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( Distribution Amount for date / Total Distribution Amount ) x Current year end E&P balance
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Formula for Calc individuals Accumulated E&P distribution?
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Date distribution amount - $ allocated from Current E&P for distribution date = Accumulated E&P dividend. BUT only up to total accumulated dividend amount
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Return on Capital formula
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Accumulated E&P runs out, then start putting into Return on Capital Column.
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Distribution of property for dividends value to Receiver?
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At FMV - Liabilities assumed. Holding period = day of exchange. Value limited to not below 0
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Distribution of Property for dividends value/consequences to distributor?
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Must treat as though it was sold.
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Stock redemption is?
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Corp receiving its own stock in return for property.
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How are Stock redemptions treated?
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Some as dividend, some as capital in character.
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Treat as a Sale if?
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1. Redemption is substantially disproportionate
2. complete termination of interest 3. Is no equivalent to a dividend. 4. Partial liquidation of corp |
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If redemption is treated as a sale then?
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Gain or Loss = FMV of prop received - Shareholders adj Basis in stock given. New basis = FMV and holding period begins day of transaction
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If redemption is treated as a dividend?
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It is considered to come from E&P and basis is added to shareholders remaining stock basis, if all stock given then basis of redeemed shares is added to basis of shares owned by other share holders.
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